Cannibalize Yourself
(Before Someone Else Does)

If you haven't read Walter Isaacson's biography, Steve Jobs, please do. Yes, you will learn that Steve Jobs could be cold, hurtful, mean and completely lacking in empathy. But, you will also see insights into the more attractive aspects of Steve Jobs: that his relentless pursuit of his visions made him one of the most high-impact business leaders of our time. This is an amazing book.

In this article I want to focus on one lesson that Isaacson relates during his telling of the story of the developments of the iPod and the iTunes music store. Isaacson writes:

One of Jobs's business rules was to never be afraid of cannibalizing yourself. "If you don't cannibalize yourself, someone else will," he said. So even though an iPhone might cannibalize the sales of an iPod, or an iPad might cannibalize the sales of a laptop, that did not deter him.

Most businesses don't heed this rule. They protect existing products, services, business lines or practice areas from the potential dilution that comes from new offerings. I've seen hotel companies be cautious as they promote new hotels coming into service, for fear they could cannibalize the sales of the companies' existing properties. I've seen insurance firms be careful about cross-selling additional services to clients for fear that the client might buy less of the first service. I've seen companies cancel important promotions because customers "who would have bought anyway" might take advantage of the promotion.

In most cases, this over-caution comes at a great price. Yes, the company avoids cannibalizing its own offerings, but it ends up worse off, on the whole, at the end of the day. Can you imagine if Apple had decided not to include the features of an iPod on the iPhone for fear that it might cause them to sell fewer iPods? What's any different about that and an insurance firm that avoids bringing health insurance ideas to clients who are already buying property and casualty insurance, for fear that it might damage the existing relationship? (I've heard that excuse from every insurance brokerage I've ever worked with and analogous excuses from every law firm I've ever worked with.)

Jobs wasn't focused on boosting the sales of any one particular Apple product; he was focused on the customer's overall experience with Apple.

What about your company? Are you ruled by product-line parochialism, or are you more focused on your customers' overall relationship with your company? Are you willing to forego a little today for the sake of strong customer relationships tomorrow?

The reality in most companies is that this over-caution happens because certain people in a company protect their own interests. The manager of one product line sabotages another to ensure he makes his forecast ... and earns his bonus. A lawyer doesn't want his clients to meet one of his partners, for fear that the client may give more business to the partner.

In one revealing story from Steve Jobs, Sony, maker of the revolutionary Walkman and Discman, lost the chance to merge digital music players with content because its music division and consumer electronics division couldn't cooperate. As the New York Times reported, "That internal battle was seen by many as the reason Sony, inventor of the Walkman and the biggest player in the portable audio market, was being trounced by Apple." In the meantime, Jobs introduced the iPod, created a music division and cut deals with Sony's competitors to deliver content through the iTunes store.